Despite its status as Africa’s largest crude oil producer, Nigeria imported crude oil worth a staggering N5.734tn between January and December 2025 as domestic refineries grappled with persistent feedstock shortages, exposing a deepening supply paradox in the country’s oil sector, The PUNCH reports.
This comes in spite of the Federal Government’s much-publicised naira-for-crude policy designed to prioritise local supply.
Yet, even as the policy sought to channel crude to local refineries, Nigeria produced 530.41 million barrels and earned about N55.5tn from crude oil sales in 2025, highlighting a stark disconnect between robust upstream output and domestic supply shortages.
Data obtained from the National Bureau of Statistics and analysed by our correspondent on Tuesday, showed that the surge represents a dramatic shift from 2024, when no crude imports were recorded, indicating a 100 per cent increase year-on-year.
An analysis of the NBS Foreign Trade in Goods Statistics report revealed that crude oil imports, classified under “Petroleum oils and oils obtained from bituminous minerals, crude”, became one of Nigeria’s major import items in 2025, driven by supply shortages to domestic refineries.
In the first quarter alone, Nigeria imported crude worth N1.19tn, underscoring the urgency with which refinery operators turned to alternative feedstock sources.
The figure rose sharply by about 37.8 per cent to N1.64tn in the second quarter, before climbing further by 46.5 per cent to N2.403tn in the third quarter, reflecting intensifying domestic supply constraints.
However, imports dropped steeply by approximately 79.2 per cent to N499.75bn in the fourth quarter, suggesting a late-year easing in demand or improved local availability, though still indicative of a volatile and inconsistent crude supply environment throughout the year.
Although the NBS report did not name specific refineries, the pattern reflects the broader systemic failure in aligning domestic crude production with local refining demand.
A further breakdown of the figures shows wide monthly fluctuations in crude imports, reflecting unstable supply conditions in the domestic market.
Refineries imported crude worth N335.69bn in January, rising by 32.6 per cent to N445.27bn in February, before declining by 8.5 per cent to N407.29bn in March.
Imports dipped slightly to N335.31bn in April but surged dramatically by 116 per cent to N724.23bn in May, suggesting heightened supply constraints locally.
In June, imports fell by 19.5 per cent to N582.94bn, before spiking to a yearly peak of N1.28tn in July, an increase of about 120 per cent, marking the highest monthly import bill in the year.
This was followed by a 51.8 per cent drop to N619.24bn in August, and further declines to N499.41bn in September and N407.08bn in October.
Imports plunged sharply by 77.2 per cent to N92.67bn in November, before dropping to zero in December, indicating a temporary easing of demand or improved local supply towards year-end.
Overall, the trend underscores a volatile supply environment, with refineries forced to adjust sourcing strategies month by month.
Findings by The PUNCH indicate that local refineries, ranging from modular plants to mega facilities such as the Dangote Refinery, are increasingly turning to international markets due to persistent challenges in sourcing crude domestically.
The refineries cite a combination of structural and commercial factors behind the development.
This was confirmed by the Crude Oil Refinery-owners Association of Nigeria, which noted that refineries turn to imports for survival and increased production capacity.
The CORAN Publicity secretary, Eche Idoko, stated in an interview that domestic refiners within the supply chain have been marginalised.
He confirmed that for several months, no allocation has been received under the Domestic Crude Oil Supply Obligation framework, naira for crude policy or through any other special arrangements.
He said, “Local refiners, especially the modular refineries, have not been getting crude, I mean zero allocation, under the DCSO or any other special arrangement.”
He said the DCSO implementation has been hampered by the ‘willing buyer, willing seller’ policy
Idoko said a modular refinery like Opac couldn’t get crude, and it stopped production for months.
According to Idoko, local refineries have the capacity to produce more than their current output, blaming the lack of enough feedstock for the current output. “We have the capacity to produce far more than what we are producing now. The challenge has always been inadequate feedstock,” he stated.
Idoko stated that some modular refineries like OPAC produce about 10 per cent of their capacities, while some shut down due to a lack of crude oil.
“A good example, the OPAC refinery has a 10,000-barrel capacity. It produces just about 1,000, and it’s not consistent. Sometimes, the refinery is shut down for months because of the unavailability of crude. The Dangote refinery was recently producing at 60 per cent of its total capacity due to the unavailability of feedstock.”
Earlier this month, Dangote Petroleum Refinery & Petrochemicals also cleared the air on the crude oil supply being received from the Nigerian National Petroleum Company under the naira-for-crude arrangement, disclosing that it receives five cargoes of crude monthly which are paid for in naira.
However, it stated that this falls significantly short of the 13 cargoes required each month to meet domestic demand.
The refinery in a statement issued further explained that the shortfall of eight cargoes is being bought from other sources outside the country.
In addition, it stated that the NNPC cargoes are priced at international market rates plus a premium.
As a result, the company said it is compelled to source additional crude from local and international traders, procuring foreign exchange at prevailing open market rates to complete the purchases.
Further investigations revealed that International Oil Companies operating in Nigeria have been reluctant to prioritise domestic crude supply, largely due to better pricing and fewer regulatory constraints in the international market.
Experts say IOCs prefer exporting crude under long-term contracts denominated in dollars, rather than selling locally under conditions that may involve pricing benchmarks, currency risks, or policy uncertainties.
They added that disputes over pricing frameworks, particularly when crude is sold at a premium and third-party influence, have further complicated domestic supply arrangements.
Similarly, an alternative solution provided by the government through the naira-for-crude policy to allow domestic refineries to purchase crude oil in local currency, reduce pressure on foreign exchange, and ensure a steady feedstock supply hasn’t met expectations.
The policy introduced in October 2024 gained prominence with the ramp-up of refining capacity, particularly from the Dangote Refinery, and was expected to mark a turning point in Nigeria’s downstream sector.
Under the arrangement, refiners would pay for crude in naira, while the government would manage foreign exchange implications through the Nigerian National Petroleum Company Limited.
However, the 2025 import figures suggest that the policy has not fully achieved its core objective.
This situation is driven by several structural challenges, including a mismatch between allocated crude and refinery demand, persistent pricing disagreements over benchmark terms, concerns among upstream producers about naira volatility, and existing forward sales and export commitments that limit the volume of crude available for domestic refining.
The NBS data further showed that Nigeria sourced its imported crude primarily from African countries such as Algeria, Angola while imports from the United States of America accounting for the largest share.
This trend reflects the growing integration of global crude markets, where refiners prioritise reliability and quality over geographic proximity.
Commenting, energy analysts have faulted the implementation of the Federal Government’s naira-for-crude policy, arguing that it has failed to significantly improve domestic crude supply or reduce fuel prices.
The Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, said the policy has delivered little impact since its introduction in 2024, as most refineries continue to rely heavily on imported crude.
Speaking in a telephone interview with The PUNCH, he said, “For me, the naira-for-crude policy that was initiated in 2024 has not yielded any reasonable output because the Dangote refinery still sources about 65 to 70 per cent of its feedstock from abroad, while about 95 per cent of modular refineries also source their crude outside the naira-for-crude initiative.
“So, the initiative, for me, is not effective, and that is why we are still seeing a large inflow and importation of crude oil in 2025. In turn, prices at the depot and pump have not been different from when we were fully importing refined products.”
He noted that while the coming on stream of large-scale refining capacity has improved product availability, it has not translated into price relief for consumers.
“The only difference now is that we no longer have supply fears; there is availability of products. But in terms of pricing, I would say the naira-for-crude policy has not translated into lower prices at the depot or pump,” he added.
Jeremiah attributed this to the continued reliance on international pricing benchmarks, even for locally supplied crude.
“Dangote’s crude from the Nigerian National Petroleum Company is still priced internationally and benchmarked to Brent. So it is not as effective as the name implies. The refinery still has to pay based on international prices when converted,” he said.
He argued that to achieve meaningful price stability, the government may need to rethink its approach.
“For me, I feel that the subsidy removal in 2023 should be replaced with another form of subsidy, but this time targeted at refineries. The crude supplied to local refineries should be subsidised. That is the only way prices can be stabilised and Nigerians will feel the impact at the pump,” he stated.
He added that the current arrangement contradicts provisions of the Petroleum Industry Act, which prioritises domestic crude supply.
“The agreement should be revisited. The policy is not effective, and Nigerians are not supposed to be buying fuel at high prices, considering that we have crude and a giant refinery. Local refineries should not struggle to access crude at all,” he said.
Similarly, a Professor of Energy, Dayo Ayoade, said structural issues in Nigeria’s upstream sector have made it difficult for policies like naira-for-crude to succeed in practice.
“We have deeply unreliable supply from NNPC, largely because the company forward-sold crude oil to secure loans for the government in the past,” he said.
“Also, for over 19 years while the Petroleum Industry Bill was being delayed, there was significant underinvestment in the upstream sector. When you combine this with government’s priority of earning foreign exchange and servicing debts, you will see that, in practice, initiatives like naira-for-crude are more on paper than reality.”
He explained that Nigeria’s current production levels are insufficient to meet both export obligations and domestic refining demand.
“NNPC must have crude oil that it can supply, but it doesn’t. By the time international oil companies take their allocations under joint ventures and production sharing contracts, very little is left,” he said.
“Take the 650,000 barrels per day Dangote refinery, for instance. It would require about 650,000 barrels daily to operate at full capacity. That is not feasible at the moment. That crude simply does not exist in available volumes right now.”
Ayoade further noted that crude importation is built into the operational model of modern refineries.
“We also need to understand that the configuration of the refinery requires a blend of different crude grades. Nigeria’s light sweet crude alone is not sufficient, so some level of importation is part of the refinery’s design and business plan,” he said.
On the outlook for 2026, he warned that the trend of crude importation by domestic refineries is likely to persist.
“This pattern will likely will continue in 2026 because issues like logistics bottlenecks, pipeline vandalism, oil theft, and delayed field development cannot be solved in a short time,” he said.
“As long as crude oil accounts for over 95 per cent of our foreign exchange earnings and the government prioritises exports, we will continue to see this pattern for a few more years.”
He added, “That is why I am always cautious when people talk about new refineries coming on stream. The real question is: where will the crude oil come from? That is the fundamental issue.”
Nigeria has long relied on imported refined petroleum products due to inadequate domestic refining capacity. However, recent investments in local refineries were expected to reverse this trend by boosting in-country processing of crude oil.
The Petroleum Industry Act introduced provisions aimed at ensuring a steady supply of crude to domestic refineries, including domestic crude supply obligations.
However, implementation challenges, legacy contractual commitments, and market realities have slowed progress, leaving refiners to navigate supply gaps through imports.
The N5.734tn crude import bill in 2025 now highlights a new phase in Nigeria’s oil sector paradox, where the challenge is no longer just refining capacity, but access to crude itself.
As the country pushes to maximise value from its hydrocarbon resources, the ability to align upstream production with downstream demand will remain critical to achieving true energy independence.
punch.ng
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